Hannover Re Q3 net up; year net to exceed €800M

FRANKFURT--German reinsurance company Hannover Re AG (HNR1.XE) Tuesday issued guidance for a full-year net profit of over 800 million euros ($1 billion) as it reported a 63% rise in third-quarter net profit to EUR670.8 million due to a dearth of disaster claims and a strong contribution from investments.

Hannover Re, one of the three largest reinsurers worldwide, also gave a net profit guidance of around EUR800 million for 2013, and a dividend payout ratio of 35% to 40%, unchanged from 2012. For 2013, it expects gross premium revenues to grow by 5%, lower than the 8% to 9% it is now forecasting for this year, up from 5% to 7%.

The company is able to issue profit guidance now because its parent company Talanx AG (TLX.XE) successfully launched on the stock exchange in October. Talanx had previously asked Hannover Re to refrain from giving guidance on a net profit figure while the initial public offering was under consideration.

Quarterly net profit rose to EUR265.5 million from EUR163.2 million a year earlier, above the EUR212 million average consensus in a Dow Jones Newswires poll. Gross premium revenue was up 13% at EUR3.41 billion, above the forecast of EUR3.30 billion. Net investment income rose 80% to EUR499.3 million from EUR278.0 million, also above the forecast of EUR367 million.

Hannover Re said it was too early to give a reliable forecast for expected claims from Hurricane Sandy, which swept along the U.S. east coast last week causing extensive flooding and power outages across the New York metropolitan area.

Reinsurers have been fortunate so far this year, as costs for major disasters haven't come close to exhausting their annual claims budgets. While the industry will likely have to pay substantial claims for Hurricane Sandy--current estimates for the insured market loss range between $7 billion and $20 billion--brokerages and ratings agencies have said the industry will find the costs manageable.

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